Business Administration 2257 Chapter Notes -Retained Earnings, Financial Statement, Complete Control
Document Summary
Internal users: people who work for the company who use the info to plan, organize, and run the company: external users: people who work outside the company who use the info to lend, invest, regulate, purchase. Limited life (if no agreement is not made to pass on ownership) Unlimited liability: if they get sued/go bankrupt, court can take personal assets. Ease of formation (few regulations to form) Taxation: earnings are taxable income of owner (whether you draw or not) All shareholders: decrease retained earnings, decrease cash: note: for simplicity in this course, dividends payable does not increase it is debited directly from the retained earnings. Appreciation of stocks: how to invest in company: increase cash, increase common shares, characteristics. Limited liability: shareholders not responsible for corporations debt. Separate legal entity: helps when getting sued and also taxation (net income and dividends) Ease of transferring ownership rights (transfer of stocks)